✦ One Goldman Sachs 3.0 and the 60% TargetNarrow moat

Goldman Sachs (GS) — the future bets

Goldman is betting artificial intelligence can bring its costs to 60% of revenue, and so far it has only got there in a record half.

Goldman's plan for its costs has a name, One Goldman Sachs 3.0, described as "A new operating model propelled by artificial intelligence"1. Its financial target is a firmwide efficiency ratio of about 60% through the cycle2.

Headcount45,900Jun 202547,400Dec 202547,000Mar 202646,200Jun 2026Goldman Sachs Form 10-K FY2025; Q2 2026 earnings release
Fewer people, record revenue.

The starting point was 64.4% in 20253. In the second quarter of 2026 the ratio was 57.4%, and 58.8% for the first half4, but that was a record revenue period, when fixed costs are spread thinly.

Headcount is the first place the plan shows. It was 47,400 at the end of 2025, 47,000 in March 2026 and 46,200 in June 202656. A bank with fewer people earning record revenue is either more efficient or at the top of a cycle; only a normal year will say which.

Compensation is the larger lever. It was $18,906 million in 20257, about half of operating expenses of $37,544 million89. Technology that lets fewer analysts and operations staff handle the same volume would cut that bill directly.

Some cost lines are already falling. Depreciation and amortization were $1,004 million in the first half of 2026 against $1,124 million, and professional fees $751 million against $864 million10. Communications and technology rose to $1,218 million from $1,036 million11, which is where an AI programme would spend first.

Headcount had risen 2% during 202512, and fell 2% in the second quarter of 202613. The turn came in the same period as the plan, though the firm has not tied the two together in figures.

The firm offers no figure for savings, so only the ratio can judge it. At or below 60% in a year when revenue did not grow, the model would be working; above 63% in a flat year, the savings would be theoretical.

Moat trajectory: Widening

Efficiency ratio 64.4% (2025) to 57.4% (Q2 2026).

The number that tests this moat
Reported
Efficiency ratio, latest quarter
57.4% (Q2 2026) vs 64.4% for 2025

The cost test of the AI operating model; above 63% in a flat year would mean the savings were theoretical.

Source: Goldman Sachs Q2 2026 earnings presentation ↗
References
  1. ReportedGoldman's plan for its costs has a name, One Goldman Sachs 3.0, described as "A new operating model propelled by artificial intelligence".
    Goldman Sachs fourth-quarter 2025 earnings presentation and strategy update, Form 8-K exhibit 99.2 - strategy and firmwide targets, talent, capital management, funding and credit. — FY2025 · publ. 15 January 2026 · source ↗
  2. ReportedIts financial target is a firmwide efficiency ratio of about 60% through the cycle.
    Goldman Sachs fourth-quarter 2025 earnings presentation and strategy update, Form 8-K exhibit 99.2 - strategy and firmwide targets, talent, capital management, funding and credit. — FY2025 · publ. 15 January 2026 · source ↗
  3. ReportedThe starting point was 64.4% in 2025.
    Goldman Sachs full-year and fourth-quarter 2025 earnings results, Form 8-K exhibit 99.1 - net revenues by region, net interest income, deposits, loans, AUS rollforward, capital returned and Apple Card effects. — FY2025 · publ. 15 January 2026 · source ↗
  4. ReportedIn the second quarter of 2026 the ratio was 57.4%, and 58.8% for the first half, but that was a record revenue period, when fixed costs are spread thinly.
    Goldman Sachs second-quarter 2026 earnings presentation, Form 8-K exhibit 99.2 - ROE, ROTE, efficiency ratio, Dealogic rankings, AUS by channel, alternatives fundraising and wealth figures. — Q2 2026 · publ. 14 July 2026 · source ↗
  5. ReportedIt was 47,400 at the end of 2025, 47,000 in March 2026 and 46,200 in June 2026.
    Goldman Sachs Form 10-K for fiscal 2025 - consolidated results of operations and financial statements. — FY2025 · publ. 25 February 2026 · source ↗
  6. ReportedIt was 47,400 at the end of 2025, 47,000 in March 2026 and 46,200 in June 2026.
    Goldman Sachs second-quarter 2026 earnings results, Form 8-K exhibit 99.1 - segment and line revenues for the quarter and half, earnings, balance sheet, capital, VaR, assets under supervision and the dividend increase - firm results: net revenues, earnings, EPS, returns and costs. — Q2 2026 · publ. 14 July 2026 · source ↗
  7. ReportedIt was $18,906 million in 2025, about half of operating expenses of $37,544 million.
    Goldman Sachs Form 10-K for fiscal 2025 - consolidated results of operations and financial statements. — FY2025 · publ. 25 February 2026 · source ↗
  8. ReportedIt was $18,906 million in 2025, about half of operating expenses of $37,544 million.
    Goldman Sachs Form 10-K for fiscal 2025 - consolidated results of operations and financial statements. — FY2025 · publ. 25 February 2026 · source ↗
  9. Moat Explorer calcIt was $18,906 million in 2025, about half of operating expenses of $37,544 million.
    Moat Explorer calculation from Goldman Sachs' reported figures ($ millions unless stated; calendar years). Growth: net revenues 2025 58,283 / 53,512 - 1 = 8.9%, about 9%; 2022 47,365 / 59,339 - 1 = -20.2%; net earnings 2022 11,261 / 21,635 - 1 = -47.9%, nearly half; pre-tax earnings 21,852 / 10,739 = 2.03 times, about double; compensation 18,906 / 16,706 - 1 = 13.2%; total operating expenses 37,544 / 33,767 - 1 = 11.2%; preferred dividends 876 / 751 - 1 = 16.6%; CEO pay 47 / 39 - 1 = 20.5%; equities 16,535 / 11,549 - 1 = 43.2%; FICC 14,522 / 12,150 - 1 = 19.5%; FICC intermediation 10,271 / 9,318 - 1 = 10.2%; FICC financing 4,251 / 2,832 - 1 = 50.1%; Global Banking & Markets 41,453 / 29,994 - 1 = 38.2%; GBM pre-tax 17,574 / 11,000 - 1 = 59.8%; advisory 4,726 / 3,299 - 1 = 43.3%; underwriting (1,784 + 2,829) / (1,153 + 1,763) = 4,613 / 2,916 - 1 = 58.2%; investment banking fees 9,339 / 6,215 - 1 = 50.3%; 9,339 - 6,215 = 3,124, about $3.1 billion; Q2 2026 pace 3,395 x 4 = 13,580, 13,580 / 9,339 = 1.45; financing 11.45 / 6.03 = 1.90, close to double; intermediation best/worst 19.6 / 15.8 = 1.24; equity underwriting Q2 985 / 428 - 1 = 130%; H1 2026 equities 12,742 / 8,493 - 1 = 50%. Assets under supervision: 4,041 / 3,606 - 1 = 12.1% (six months); 3,606 / 3,137 - 1 = 15.0%; Q2 2026 rise 4,041 - 3,650 = 391 = inflows 230 + appreciation 161; management and other fees 11,538 / 10,415 - 1 = 10.8%; historical principal investments 9.4 - 6.0 = 3.4 billion; alternatives target 750 - 459 = 291 billion, 291 / 4.5 = 64.7, about 65 a year; 291 x 0.58% = 1.69 billion, about 1.7 billion; Shell mandate 40 / 4,041 = 1.0%; AWM ROE 12.5 + 2.3 = 14.8, near 15%. Shares of revenue: GBM 15,520 / 20,338 = 76.3% (Q2 2026), 41,453 / 58,283 = 71.1% (2025), 29,994 / 46,254 = 64.8% (2023); AWM 16,679 / 58,283 = 28.6% (2025), 16,316 / 53,512 = 30.5% (2024), 14,202 / 46,254 = 30.7% (2023), 4,597 / 20,338 = 22.6% (Q2 2026); equities 7,416 / 15,520 = 47.8% of the segment in Q2 2026; advisory 4,726 / 58,283 = 8.1%; GBM pre-tax 17,574 / 21,852 = 80.4%; FICC plus equities 14,522 + 16,535 = 31,057; Q2 2026 financing 1,216 + 3,259 = 4,475; durable revenues 26.3 / 58.283 = 45.1% (2025), 12.2 / 36.546 = 33.4% (2019); GBM assets 1,582,670 / 1,809,320 = 87.5%; brokered and sweep deposits (47 + 34) / 501 = 16.2%; compensation 18,906 / 37,544 = 50.4% of operating expenses; preferred dividends 876 / 17,176 = 5.1% of net earnings; financing against alternatives fees 11.45 / 2.37 = 4.8, about five times. Margins: GBM pre-tax margin 17,574 / 41,453 = 42.4% (2025), 11,000 / 29,994 = 36.7% (2023); AWM 4,127 / 16,679 = 24.7% (2025), 4,865 / 16,316 = 29.8% (2024), 1,763 / 14,202 = 12.4% (2023). Balance sheet and capital: total assets 2,128 / 1,675.972 - 1 = 27.0% (end-2024 to June 2026); equity 121,996 to about 123,000, almost unchanged; deposits 558 / 433 - 1 = 28.9%, about 29%; loans to deposits 261 / 558 = 46.8%, about 47%; JPMorgan deposits 2,559,320 / 501,000 = 5.1 times; CET1 headroom 12.9 - 11.4 = 1.5 points, about 150 basis points; a repeat of the first-half fall 12.9 - (14.3 - 12.9) = 11.5%; basic shares 298.4 / 322.9 - 1 = -7.6%, about 8% fewer; TBVPS 335.49 / 316.02 - 1 = 6.2%; buyback price 935.45 / 984.57 - 1 = -5.0%; first-half ROE 21.7 - 1.7 = 20.0%; Platform Solutions pre-tax losses 783 + 1,047 + 1,989 + 2,175 + 1,075 = 7,069, about $7.1 billion. Valuation: trailing twelve months to June 2026 net revenues 58,283 - 29,645 + 37,565 = 66,203; net earnings 17,176 - 8,461 + 12,258 = 20,973; diluted EPS 51.32 - 25.07 + 38.51 = 64.76; P/E 283,220 / 20,973 = 13.5; P/S 283,220 / 66,203 = 4.28; year-end P/E 263.64 / 17.176 = 15.35 (2025), 179.75 / 14.276 = 12.59 (2024), 125.80 / 8.516 = 14.77 (2023), 128.08 / 21.635 = 5.92 (2021); 52-week high 935.45 / 1,153.99 - 1 = -18.9%, about 19% below; Morgan Stanley gap 308.32 - 283.22 = 25.1 billion; market value on basic shares 298.4 x 935.45 = 279.1 billion. Further: Platform Solutions provisions against revenue (old basis) 1,728 / 1,502 = 115% (2022), 1,135 / 2,378 = 47.7%, about 48% (2023), 1,540 / 2,427 = 63.5%, about 63% (2024); 2021 to 2022 revenue fall 59,339 - 47,365 = 11,974, about $12 billion; Q2 2026 equities less Q1 7,416 - 5,326 = 2,090; AWM revenue 2025 16,679 / 16,316 - 1 = 2.2%; liquidity products 1,065 / 4,041 = 26.4%, about a quarter; AUS year on year 4,041 / 3,293 - 1 = 22.7%, about 23%; alternatives 459 / 2,976 = 15.4% of long-term AUS; private banking and lending H1 2026 638 + 689 = 1,327, x 2 = 2,654, near $2.7 billion; VaR factors before diversification 82 + 65 + 19 + 30 = 196; GBM Q1 2026 12,738 / 17,227 = 73.9%, about 74%; transaction banking and private bank deposits (70 + 101) / 501 = 34.1%, about a third; GBM assets share 87.5%, nearly nine-tenths; EMEA 2025 14,155 / 12,250 - 1 = 15.6%, about 16%; unsecured long-term borrowings 285,500 / 242,634 - 1 = 17.7%, about 18%; JPMorgan deposits 2,559,320 / 2,406,032 - 1 = 6.4%; Goldman deposits 501 / 433 - 1 = 15.7%, about 16%; H1 2026 financing 2,278 + 5,867 = 8,145; Q2 2026 compensation 6,104 / 4,685 - 1 = 30.3%; diluted shares 321.4 / 306.5 - 1 = 4.9%, about 5%; advisory 2025 4,726 / 3,534 - 1 = 33.7%, about 34%; underwriting 2025 (1,784 + 2,829) / (1,677 + 2,521) = 4,613 / 4,198 - 1 = 9.9%, about 10%; debt share of underwriting 2,829 / 4,613 = 61.3%, about three-fifths; wealth channel 1,041 / 862 - 1 = 20.8%, about 21%; CET1 ratio 101,657 / 790,640 = 12.86%; 101,657 / 800,640 = 12.70%, so 10 billion of RWAs costs about 16 basis points; GBM pre-tax Q2 2026 7,499 / 4,075 - 1 = 84.0%; market value 2025 263.64 / 179.75 - 1 = 46.7% - valuation, balance sheet, capital and cost arithmetic. — FY2019-Q2 2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in Goldman Sachs' Forms 10-K and 10-Q, its earnings releases and presentations, JPMorgan's Form 10-K and market data; operands shown in the source line.
  10. ReportedDepreciation and amortization were $1,004 million in the first half of 2026 against $1,124 million, and professional fees $751 million against $864 million.
    Goldman Sachs second-quarter 2026 earnings results, Form 8-K exhibit 99.1 - segment and line revenues for the quarter and half, earnings, balance sheet, capital, VaR, assets under supervision and the dividend increase - firm results: net revenues, earnings, EPS, returns and costs. — Q2 2026 · publ. 14 July 2026 · source ↗
  11. ReportedCommunications and technology rose to $1,218 million from $1,036 million, which is where an AI programme would spend first.
    Goldman Sachs second-quarter 2026 earnings results, Form 8-K exhibit 99.1 - segment and line revenues for the quarter and half, earnings, balance sheet, capital, VaR, assets under supervision and the dividend increase - firm results: net revenues, earnings, EPS, returns and costs. — Q2 2026 · publ. 14 July 2026 · source ↗
  12. ReportedHeadcount had risen 2% during 2025, and fell 2% in the second quarter of 2026.
    Goldman Sachs full-year and fourth-quarter 2025 earnings results, Form 8-K exhibit 99.1 - net revenues by region, net interest income, deposits, loans, AUS rollforward, capital returned and Apple Card effects. — FY2025 · publ. 15 January 2026 · source ↗
  13. ReportedHeadcount had risen 2% during 2025, and fell 2% in the second quarter of 2026.
    Goldman Sachs second-quarter 2026 earnings results, Form 8-K exhibit 99.1 - segment and line revenues for the quarter and half, earnings, balance sheet, capital, VaR, assets under supervision and the dividend increase - balance sheet, capital, risk, provisions, headcount and capital returned. — Q2 2026 · publ. 14 July 2026 · source ↗
Sources
Generated September 28, 2026